Crummey power
Certified Financial Planner glossary · Certified Financial Planner
Definition
A beneficiary’s temporary right to withdraw a trust contribution, converting a future interest into a present interest eligible for the annual gift tax exclusion.
Crummey power in plain English
Grandparents fund an ILIT, and each child gets a short window to withdraw the contribution. That Crummey power is a beneficiary's temporary right to withdraw, converting what would be a future interest into a present interest eligible for the annual gift tax exclusion. Without it, the gift to the trust may not qualify for the exclusion. Notices and real withdrawal rights matter; paper-only powers invite challenge. Tie the power to annual-exclusion strategy, then apply five-and-five if rights lapse.
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